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The Income Multiplier
Beckenstein, Alan R.; Appleyard, Melissa M.; Christmann, Petra Technical Note BP-0454 / Published August 23, 2001 / 6 pages.
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Product Overview

This note provides an overview of fiscal-policy tools and how fiscal policy influences GDP through the income multiplier. The mechanics behind the income multiplier are explained and an algebraic derivation is provided. The note also provides examples of how parameters associated with disposable income (e.g., the tax rate and marginal propensity to consumer) influence the magnitude of the income multiplier.

  • Overview

    This note provides an overview of fiscal-policy tools and how fiscal policy influences GDP through the income multiplier. The mechanics behind the income multiplier are explained and an algebraic derivation is provided. The note also provides examples of how parameters associated with disposable income (e.g., the tax rate and marginal propensity to consumer) influence the magnitude of the income multiplier.

  • Learning Objectives